The implementation of national budgets has been stuck at a particular level for years, leaving substantial portions of allocated funds unspent.
It is a common phenomenon that the authorities revise the budget after nine months and find the implementation rate even lower than the revised figure at year end.
Throughout the last three years, the actual spending falls short of the projected figures by about Tk 1000 billion.
According to ten years of data from the Finance Division, the budget implementation rate consistently ranges between 80 and 85 per cent, and the situation is nothing different for the current fiscal year.
The initial budget for the fiscal year 2023-24 was Tk 7,617 billion, and it has already been revised down to Tk 7,150 billion. The finance division sources predicted that the final implementation rate will be around 85 per cent, amounting to Tk 6,475 billion.
Experts said there are several factors that contributed to the underperformance, including insufficient feasibility studies, non-appointment of qualified employees, inefficiency, lack of accountability, project delays, and ambitious revenue collection and expenditure estimates.
Some vital sectors, including education and health, receive lower allocations due to the inefficiency in budget implementation. In contrast, the allocations for infrastructure development and other non-development sectors are being spent fully.
In conversations with Prothom Alo, two former finance secretaries said the implementation rate remains low as the budgets are formulated in accordance with the deficit, rather than reality.
Among other factors, they mentioned non-compliance of the recommendations made by the implementation, monitoring and evaluation division (IMED).
Former caretaker government advisor AB Mirza Azizul Islam pointed out that administrative inefficiency and lack of accountability are the primary reasons behind the low budget implementation.
In a fiscal year, the last three months see implementations of annual development programme (ADP) projects to an extent which is equal to the implementations of the preceding nine months. In consequence, the nation suffers in multiple ways, including compromised work quality and inflated project costs, he said.
To improve the situation, Mirza Azizul Islam suggested that the ministries and divisions complete their part of work in advance and initiate paper works and tender processes following the approval of the national budget.
Finance minister Abul Hasan Mahmud Ali is scheduled to place the budget for fiscal year 2024-25 before the parliament on 6 June.
World Bank advises information sharing
The government, in collaboration with the World Bank, carried out a study on budget implementation and released a report – Public Expenditure and Financial Accountability (PEFA) Assessment 2021 – in April last year.
The report mentioned the prime weaknesses in budget implementation to be insufficient budget preparation, accountability, and credibility. The factors lead to a difference between the budget and the implementation. There remains discrepancies between the revenue figures in the budget and the implementation, but the authorities disclose a little to the public.
The report also noted the lack of transparency in the government's financial data and the absence of comprehensive internal audits on budget implementations. It is regrettable that the authorities do not make public the reports of parliamentary standing committees.
Former finance secretary Mahbub Ahmed said there is no alternative to meeting the operational costs, including salaries and loan interests. Apart from that, the main responsibilities for low implementation of budget go to non-execution of ADP projects, followed by the wastage, lack of spending capacity, and employment of inexperienced project managers.
To address the situation, he called for a revival of the PD pool – a strategy implemented a decade ago to expedite project execution.
When asked about the scenario, Muslim Chowdhury, former comptroller and auditor general and finance secretary, posed some questions – How would the budget be implemented fully? Are the budgets consistent with the reality or deficit? Are the IMED recommendations taken into account?
He mentioned non-employment of skilled project directors, complexities in land acquisition, in addition to inefficiency of government agencies, as reasons behind the scenario.
“The most crucial issue that usually does not come to discussion is unauthorised projects. The list of such projects is not so short. These projects are often approved through lobbying, and in the middle of the fiscal year, money is transferred from bulk allocations to fund them. This way, the fiscal year comes to an end, but the allocations remain unspent," he explained.